Glossary

A momentum oscillator that measures the speed and magnitude of price changes on a scale of 0 to 100. RSI helps identify overbought conditions (typically above 70) and oversold conditions (typically below 30). It is calculated by comparing the magnitude of recent gains to recent losses over a set period, usually 14 days.

A charting method that displays the volume traded at each price level over a selected time range. VPVR shows where the most trading activity occurred, highlighting high-volume nodes (areas of strong agreement) and low-volume nodes (areas where price may move quickly). It helps identify significant support and resistance levels based on actual trading interest.

A price level where a significant amount of volume was traded. High volume nodes often act as support or resistance because many participants have positions or interest at that level. Low volume nodes (or 'valleys' between high-volume areas) are zones where price tends to move quickly with less friction, as fewer trades occurred there.

A volatility indicator consisting of a middle band (typically a 20-period simple moving average) and two outer bands set at two standard deviations above and below the middle. The bands widen when volatility increases and narrow when it decreases. Price touching the upper band may suggest overbought conditions; touching the lower band may suggest oversold. The bands also help identify potential breakouts when price moves outside the band.

The average of a security's price over a specified number of periods. Each data point in the average is weighted equally. For example, a 50-day SMA is the sum of the closing prices for the last 50 days divided by 50. SMAs smooth out price data to help identify trend direction and are often used as dynamic support and resistance levels.

A type of moving average that places a greater weight and significance on the most recent data points, reacting more quickly to recent price changes than a Simple Moving Average (SMA).

The total underlying value of all contracts traded, calculated by multiplying the contract volume by the underlying stock price.

The total amount of money a company brings in from its business activities (sales of products or services) before deducting expenses. Revenue is reported on the income statement and is a key measure of a company's scale and growth. It does not account for costs, so a company can have high revenue but still be unprofitable.

Revenue minus the cost of goods and services sold (COGS). Gross profit shows how much money remains after paying the direct costs of producing what the company sells, before operating expenses, interest, and taxes. It is a core measure of pricing power and production efficiency.

Gross profit as a percentage of revenue (Gross Profit / Revenue). It shows how much of each dollar of sales is retained after direct production costs. A higher margin generally means stronger pricing power or lower production costs; changes in the margin can signal mix shifts, discounting, or cost inflation.

Operating profitability before interest, taxes, and non-cash charges for depreciation and amortization. EBITDA is often used to compare companies with different capital structures or tax situations. It is not a GAAP profit figure and can overstate cash generation because it ignores capital expenditures and working-capital needs.

The bottom-line profit left after subtracting all expenses, interest, and taxes from revenue. Net income is reported on the income statement and is the starting point for earnings per share. It includes non-cash items such as depreciation, so it can differ from the cash a company actually generated.

A company's net profit divided by the number of outstanding shares. EPS shows how much profit is attributed to each share of stock and is a common measure of profitability. Higher EPS generally indicates better profitability on a per-share basis. EPS can be reported for past periods (trailing) or estimated for future periods.

The net cash generated or consumed by a company's core day-to-day operations. It starts from net income and adjusts for non-cash items and changes in working capital. Positive CFO means the business is producing cash from its main activities; it is the first input into free cash flow.

Cash spent to acquire, upgrade, or maintain long-term physical assets such as property, plants, and equipment. CapEx is an investing outflow on the cash flow statement. High CapEx can support growth, but it also reduces free cash flow in the period it is spent.

The cash a company generates after accounting for cash outflows to support operations and maintain its capital assets. It's a measure of profitability that excludes the non-cash expenses of the income statement.

The most liquid assets on the balance sheet: cash on hand plus short-term instruments that can be converted to cash quickly. Cash is what a company can use immediately to fund operations, pay down debt, or return capital to shareholders.

The total amount a company owes to lenders, typically including short-term and long-term borrowings. Comparing debt to cash shows how leveraged the balance sheet is and how much liquidity remains after obligations. Rising debt can fund growth, but it also increases interest costs and financial risk.

The ratio of a company's share price to its earnings per share (EPS). P/E indicates how much investors are willing to pay per dollar of earnings. A higher P/E may suggest the market expects growth or the stock is overvalued; a lower P/E may suggest undervaluation or lower growth expectations. It is often compared to historical P/E or peers in the same industry.

The ratio of a company's market capitalization (or share price) to its revenue. P/S measures how much the market values each dollar of sales. It is useful for comparing companies that are not yet profitable or have inconsistent earnings, since revenue is less subject to accounting adjustments than earnings.

A financial contract that gives the buyer the right, but not the obligation, to buy an underlying asset at a specified strike price within a specific time period.

A financial contract that gives the buyer the right, but not the obligation, to sell an underlying asset at a specified strike price within a specific time period.

The set price at which an option contract can be bought or sold when it is exercised.

The total number of outstanding derivative contracts, such as options or futures, that have not been settled.

A metric that captures the market's view of the likelihood of changes in a given security's price. Higher IV indicates higher expected price swings.

The ratio comparing the change in the price of the underlying asset to the corresponding change in the price of a derivative. It is often used as a proxy for the probability that an option will expire in-the-money.

The number of days remaining until an option contract expires.

The sensitivity of an option's delta to changes in the price of the underlying asset. Market makers' hedging of gamma can act as a magnet or repellent for stock prices.

The difference between the Call Gamma Exposure and Put Gamma Exposure at a specific strike price or across all strikes.